Lack of transformation made it easier for construction cartel – Roger Jardine

2013-10-09 10:22

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A lack of transformation made it easier for the construction cartel to go about its business, former Aveng CEO Roger Jardine has said.

Speaking at a public lecture at the University of the Witwatersrand last night, he said the cartel was managed by a small group of individuals who met in 5-star hotels to allocate construction projects.

Jardine said in these small circles there was handpicked succession planning.

He expressed a view that if transformation in the sector had taken place, it would have probably been much harder to run the cartel.

Jardine also said that as the saying goes “there is no honour among thieves” and told anecdotes about construction bosses agreeing to rig contracts, but then turning on each other and going back on their word.

He said construction bosses implicated in the cartel should be personally prosecuted and held accountable.

Jardine also argued it was right for civil claims to be launched against the guilty construction firms.

He said: “The prospect of jail time will act as a real deterrent to collusion.”

Jardine said he had seen employees implicated in collusion just leave Aveng and take up work with competitors and continue relatively unscathed.

“We must make people personally accountable for their actions,” he said. “I believe that collusion is just a nice word for corruption.”

Jardine said if executives or managers are found guilty they should be prevented from holding any senior positions in future.

He was appointed as the CEO of Aveng in July 2008 and two weeks later received his first summons from the Competition Commission regarding an investigation into a concrete pipes cartel.

“I found myself in the middle of a scandal, not of my making,” he said.

Once the commission’s fast track settlement process was concluded, Jardine announced he was stepping down, having been at the helm of the company for a difficult five years and having dealt with an investigation into anti-competitive behaviour that occurred before he was appointed into the CEO position.

Ultimately, Aveng settled 17 violations of South African competition law and paid a fine of R306.5 million.

Jardine said the concrete pipes cartel had been running since 1973.

“I found this astounding, this cartel had been running since I was nine years old, playing in the sand dump,” said Jardine.

Jardine described the construction cartel’s activities as “the biggest corporate scandal in post-apartheid South Africa”.

Jardine spoke of the dilemma of dealing with employees who were involved in the collusion.

“My first impulse was to fire anyone who had any link to collusion,” said Jardine. “But you can’t fire everyone, as you have a company to run and projects to deliver.”

“Your colluders are in the older, more experienced bracket of employees,” he said.

Jardine said Aveng had to develop a set of standards for dealing with implicated employees.

He says anyone who “blatantly lied” was dismissed.

“Some people resigned before I could fire them,” he said.

Jardine said one staffer even took Aveng to the CCMA when his bonus wasn’t paid due to his involvement in collusion.

“I was looking forward to the matter being heard in public, but he withdrew,” said Jardine.

Jardine stressed if the Construction Industry Development Board blacklisted guilty companies, it would be “a blunt policy instrument” and would harm the country and its infrastructure build.

He said an “integrity pact” signed by all companies doing business with the state would be a better idea.

Jardine said South Africa was “unraveling” under the weight of private and public sector corruption and said there is an “ideological cold war” between the state and corporate South Africa.

Public anger about the construction cartel was evident during the question and answer session. One member of the audience suggested Jardine should hang his head in shame, while another said the construction sector’s arguments sounded like the banks during the financial crisis, arguing they were “too big to fail”.

Another audience member suggested that all construction CEOs should be jailed for what happened.

Jardine responded saying, “no one should leave here with the impression that I am here to defend an old white industry”.

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